Advisers have raised concerns that Friends Provident tied agent Genistar is sending its salesforce out with an average of 30 days’ training to sell protection and refer people for other financial products, including mortgages and investments.
Genistar sells life insurance and critical-illness cover through its network of 700 self-employed appointed representatives. It also has several commercial partners to which it refers business.
Mortgage enquiries and debt management cases are passed to Surrey Finance Bureau, which in turn outsources debt management cases to Abacus Finance, among others.
Buildings and contents cover is arranged through Assurant Intermediary and Higos handles other insurance products such as commercial insurance and car insurance. For investment queries, a referral form is filled out and passed to F&C Asset Management.
The company has been running a pilot over the last two months with claim management firm Maple Leaf Financial. Clients are referred to Maple Leaf where they are thought to have potential misselling claims for payment protection insurance.
The Genistar website claims many of its part-time ARs earn an extra £200 to £400 a month.
To be able to sell life cover and give referrals on other financial products, ARs have to first observe two live fact-finding interviews. They then study a 50-page manual and have to achieve a 70 per cent pass rate on a 50-question multiple-choice exam. The pass rate among those taking the exam for the first time is about 70 per cent. The exam can be retaken. ARs also have to pass a role-play competency assessment by carrying out a fact-find with a company manager.
Genistar co-chief executive and marketing director Jeff Lestz says, on average, the training process takes around 30 days, although he points out that only 30 per cent of applicants make it through the entire process. The firm works on referrals only and encourages consumers to recommend 10 others who they believe would benefit from the company’s “financial education” presentations.
Lestz says: “Where we are really different from other companies is that we have a rule that says you cannot purchase anything on the first interview even if you wanted to. Many people have ended up making financial blunders as a result of being pressured into something.
“In the first interview, we spend between half an hour and 45 minutes going through a financial education presentation, covering concepts such as getting out of debt and avoiding paying high interest rates on credit cards.”
Genistar is authorised to give advice on life and critical-illness cover. It is planning to restructure its business model so its self-employed agents will no longer be ARs of the company but instead will be introducer appointed representatives. Lestz says this allows them to introduce business without giving advice or guidance. He says agents can then educate people about the concepts of other products before referring cases to a qualified adviser.
Lestz says the Genistar model is simple, based on basic concepts such as setting up a budget or selling life cover. He says: “Those are not exactly rocket science. The fact is the IFAs of today are really not interested in helping someone to invest £25 a month in an Isa.
“The IFAs that I have met are being squeezed and forced to deal with wealthier people. I would say that 99 per cent of the people that we go out and talk to in the middle-income market have never even spoken to an IFA.
“There is a huge gap in the market for people to get financial education. I think that is one of the reasons our model is successful and will continue to work. People are hungry for knowledge.”
Genistar’s stated goal is to eventually have 10,000 associates working as part of the company’s network.
Lestz says: “There are predictions that by the time the retail distribution review has come into force, there will only be 10,000 IFAs. If there are 10,000 IFAs and we have 10,000 int-roducers, we will be as big as the rest of the industry.”
He acknowledges that his model may be criticised by others in the financial services industry but he adds: “Someone has got to serve the middle-income market and if somebody else can come up with a better answer I would like to hear it.”
Yet advisers remain concerned that the training is not robust enough.
Baronworth Investment Services director Colin Jackson says: “If you are going to advise, you have to take the relevant qualifications and a tick-box questionnaire is not going to cover it. You cannot advise after 30 days training, it is just not possible.”
Yellowtail Financial Planning managing director Dennis Hall says: “I do not really get the model. I have met some of the agents and they come across as though they are accountants or that they are helping people with their debt problems but I am not sure they are that up front about the fact they are there to shift protection products.
“To be able to offer this service as an IFA, you would need to do more than one exam. Fifty multiple-choice questions do not sound enough to me.”